Safe havens to stay in focus

The safe-haven Swiss franc rebounded in Asia on Friday, after posting record one-day falls against the euro and dollar overnight after the Swiss National Bank threatened to step up its fight to curb the franc’s strength.

The euro was down 0.4 percent to $1.4190, though global focus would likely be on how the single currency fares against the Swiss franc.

The euro surged a record 5% against the franc overnight, but was trading down 0.8% at 1.0761 francs in Asian trading.

‘Market reaction was probably a reflection of how long participants are of the Swiss franc,’ said Richard Grace, chief currency strategist at Commonwealth Bank.

Gold prices were down marginally at $1,765.19 an ounce, some 2.7 percent below a record high of $1,813.79 hit on Thursday. Still, the metal was up 6.2% this week, on course for the biggest weekly gain since January 2009.

Oil CLc1 also snapped a two-day rising streak, falling 1.&, after having gained 6.4 percent over the last two days.

GBP

Sterling recouped losses, pulling away from near three-week lows against the dollar on Thursday, helped by rebounding stocks, although a murky outlook for the UK economy and speculation of more monetary easing checked sharp gains.

Sterling also made solid gains against the Swiss franc , which fell sharply on speculation that the Swiss National Bank could possibly peg the franc to the euro to rein in a soaring currency, just a day after it announced fresh monetary easing measures to rein the surging franc.

The BoE on Wednesday cut its expectation for annual GDP growth to around 2.0% for the fourth quarter of 2011. In May, it had forecast 2.5% growth by the end of the year. The bank also said inflation would fall rapidly in 2012.

Markets expect the BoE to keep interest rates at record lows into 2013, with a growing feeling that another round of quantitative easing could be on the cards to stimulate growth, a tool which BoE governor Mervyn King has said may still be needed.

Risks to the UK economy are being amplified by the knock-on effects stemming from the eurozone’s debt crisis and mounting worries over the French banking sector, which continued to cause high volatility in stock markets.

EUR

The euro posted its best days ever against the Swiss franc on Thursday, jumping as much as 6% after falling to record lows this week, as the Swiss National Bank said it could peg the franc to the euro to rein in its soaring appreciation. The gains come a day after turbulence saw the euro hit as fears of a French banking crisis emerged.

The outlook, however, remains bleak for the Euro on persistent global economic uncertainty and worries about eurozone banks with large exposure to peripheral debt.

USD

The dollar also posted record gains against the Swissie as US stock futures slid 1% on Friday, pulling Asian shares off early highs as sentiment remained cautious on concerns over the European debt crisis, which will probably keep supporting safe havens like gold and the Swiss franc.

Wall Street jumped 4% overnight in high volume, with relatively low valuations and short-term oversold conditions attracting buyers, though the see-saw moves this week appear to be continuing with US equity markets set for a weaker open.